Almost every business in India is associated with the Goods and Services Tax Act. The regime rolled-out almost a year ago and has now gripped more than one crore businesses. Although there are some issues related to the compliance, the taxpayer’s acceptance rate of the regime has been a great achievement for the government. The reports showcase that GST is the most complex taxation system in the entire taxation history. But what makes it complex?
There are multiple reasons behind the regime going a little out of the hands. But before we dip into the river of GST problems, let’s take a look at the accomplishment stats of the Goods and Services Tax:
- Consumed all the earlier taxes like service tax, VAT, excise duty, processing charge, etc.
- More than 5 million return filers and taxpayers.
- Crossed the 90 thousand crores mark in the revenue collections.
- Brought India amongst the list of the countries using the most complex taxation system.
Unfortunately, these problems of the taxation regime overshadow its achievements. It’s good to move ahead of the global trends but overlooking the economic conditions of the nation is clumsy. And it has made not only the small businesses suffer, but also the exporters in the nation are adversely affected. You’ll be amazed to know that the PwC has given its suggestions for the betterment of the regime. And also highlighted the parameters which can make GST painless for the businesses overall.
Knocking off the tax rates
The government’s priority list is filled with the options that make the entire regime more terrible. Some of the government’s decision seem like a rabbit is pulled out of a hat but has the exact reverse effects on the taxation. FYI, the government made the GST registration online India easier and also exempted few items from the 28% tax category. But the statistics on the revenue collections show that only exempting the items from the 28% list won’t help. The government has to consider lessening it down to 20% or 22%. In the addition to the reduction in the tax rate, the clubbing of 12% and 18% tax category is also important. These substantial reductions and exclusions will result in making the regime simpler.
Changing the rules
The legislative section of the taxation regime needs to be reviewed. The taxation has been suffering since GST act in India got rolled-out due to the loopholes in the taxation rules. There are many rules in GST that contradict the objective behind its implementation. One such rule is the goods in the customs sold to the customer. This attracts the tax on the same transaction twice, once the goods are brought in the warehouse and the second when they are sold to the customer. Although this is not something done on purpose, such lags sound an alarm that the changes should be made.
The flexibility offered to the taxpayers under the Goods and Services Tax network is very limited. If you have a business registered under GST as its branches in different states with the same PAN, then if,
- Any of the entity under your business paid extra tax, you will not have the option to set it off.
- You will also have to reshuffle the tax or else the final tax liability will not match the invoices.
Such rigid structure of GST registration online sometimes chokes the functioning of the businesses. Also, the GSTN portal doesn’t allow the filing of the return if the last one is unfiled. These issues, if resolved soon, will result in the formation of the easy-to-use online portal.
Undoubtedly, the anti-profiteering measures could reduce the evasion practices and even put an end to it. But the clarity of the government on the assigned ways for the analysis of anti-profiteering lacks acquaintance. There is also an un-clarity in the reduction of the product and offer gifts to the customers instead. Moreover, when a business shifts to the Goods and Services Tax, it has to incur lots of expenses. The government has to make clear that whether such expenses should be included in the compliance costs or not.
One amazing thing about the Goods and Services Tax is that it brought in trend the usage of the online GST software. This specific tool has helped millions of businesses to comply with the regime. Also, the service the IT industry catered for the taxpayers has resulted in the taxation cost and time reduction by an enormous amount. So no matter what way the regime goes in the future, the people of the nation will also have the technology serving as the backbone of the businesses and even themselves.